The Bear Case in Copper: Premarket Take 9/21/09

I’ve been bullish for quite some time now, frankly i’ll chalk that up more to being lucky than good.  The only way to trade this market right now is to put blinders on and pay zero attention to the fundamentals.  That doesn’t mean though that you shouldn’t be paying attention to important correlations in that market.  I’ve been watching copper closely the past few weeks as it is the material that started everything back late December of 08′.  Copper was first to bottom and led the Chinese market as the first assets to begin their rallies.

We are seeing some interesting things going on in the copper market now.  Copper has held in a range since the beginning of August and is showing signs of a possible top.  I’m not in the business of calling tops or bottoms.  I heard a great joke on the topic though from the humor group on the StockTwtis Desktop.  The only person who is qualified to call tops and bottoms is Hue Hefner.  Frankly this is true.  Anyway, copper looks toppy.

On the daily chart, we may be seeing a rounding top.  Further weakness today would also produce the first sell signal on my system since the rally started in March (not a signal to get short though).  Copper has been the epitome of a perfect trend since March.  On the weekly chart, the two red candles to the far right look very ominous.

If copper was the tell for the Chinese market on the way up, I can see it being the tell on the way down.  I’m not calling a top here, but this is definitely something to keep your eyes on.

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